Social Capital, the enterprise capital agency led by podcaster and former Facebook govt Chamath Palihapitiya, fired two of its companions associated to an undisclosed matter involving its funding in AI startup Groq Inc.
The agency “became aware of a situation” final week, and after conducting an inside probe it employed Wachtell, Lipton, Rosen & Katz to research the matter on Thursday, in response to a letter Palihapitiya despatched to buyers that was reviewed by Bloomberg. “On Sunday night we terminated Jay Zaveri and Ravi Tanuku,” Palihapitiya stated within the letter.
Whereas the agency has declined to elaborate on the explanations for the firings, one individual conversant in the matter stated that it stemmed from perceived breaches of firm coverage.
The incident is expounded to Groq, a startup that Social Capital backed in 2017 and 2018 via a $60 million convertible be aware. Groq has since surged in worth, reaching a $1.1 billion valuation in 2021, in response to PitchBook knowledge. Zaveri, who’s on Groq’s board, and Tanuku had marketed a particular objective automobile that provided an allocation in Groq’s convertible be aware, an individual with information of the matter stated.Play Video
A consultant for Groq didn’t instantly reply to a request for remark. The Monetary Occasions earlier reported Groq’s involvement.
“Mr. Zaveri’s firing was unfair and undeserved,” a spokesman for Zaveri stated. “The firm’s leadership approved and participated in the investment that is now being used as a pretext to fire him. Mr. Zaveri stands by his 28-year track record of integrity and looks forward to the truth coming out.”
Whereas Social Capital hasn’t disclosed its reasoning, Palihapitiya hosted a name Wednesday for buyers in his fund to debate the firings and permit them to ask questions. Though it was scheduled to final an hour, it was over in seven minutes and didn’t reveal important new info, in response to one investor who was on the decision however was not approved to talk publicly.
In a put up on X on Tuesday, Social Capital wrote, “We have terminated the employment of two of our employees due to employee-specific circumstances. We have no further comments at this time.”
“Mr. Tanuku was terminated without cause,” his lawyer stated. “A number of employees invested in and worked on the SPV. Mr. Tanuku firmly believes that he has acted with the utmost integrity during his tenure at Social Capital and throughout his career, as will be substantiated when the full facts come to light.”
In his letter, Palihapitiya added that Social Capital is “working with the CEOs of all the portfolio companies on whose boards Jay sat to effect an orderly transition and we do not foresee any major issues.”
In a associated transfer, the agency stated that Steve Trieu will function its international chief monetary officer on an interim foundation, “overseeing all finance aspects of the organization.”
Trieu, who was concerned with Social Capital’s special-purpose acquisition corporations, stepped again from the agency in Might 2021, in response to his LinkedIn profile.
Social Capital spent current years on the forefront of the SPAC growth. The technique offered startups with an alternate path to preliminary public choices or direct listings, typically permitting corporations to go public sooner than they may in any other case be capable of. His early and prolific involvement earned Palihapitiya the nickname the “SPAC King.” Nevertheless, among the corporations his SPACs merged with — together with Opendoor Technologies Inc. and Virgin Galactic Holdings Inc. — took a dive after going public.
